Which statement best describes an irrevocable trust?

An irrevocable trust is characterized by the fact that once it is established, the terms of the trust cannot be altered or revoked by the grantor. This lack of flexibility provides significant benefits, one of which is the protection it offers from creditors. Since assets placed in an irrevocable trust are no longer owned by the grantor, they are generally shielded from claims made by creditors against the grantor. This makes the irrevocable trust a useful tool for estate planning, asset protection, and tax benefits.

The other options do not accurately capture the essence of an irrevocable trust. Revocable trusts allow for flexibility and changes by the grantor, which is contrary to the nature of an irrevocable trust. Ongoing management by the grantor is typically not possible unless specific provisions are laid out, as the grantor relinquishes control over the assets transferred into the irrevocable trust. Lastly, beneficiary designations in an irrevocable trust cannot be changed freely, as the establishment of the trust represents a final decision that typically cannot be modified later. This further emphasizes the permanence and distinct characteristics of irrevocable trusts.